Project’s Overview

In this project, we wrote codes for the widely used models of earning management. These models calculate discretionary accruals with varying assumptions. Four well-known models are 1. Jones (1991)

2. Dechow, Sloan, and Sweeney (1995)

3. Kasznik (1999)

4. Kothari, Leone, and Wasley (2005)

In the first step, we calculate the models variables and then estimates the model to find discretionary accruals, a proxy for earning management. Further details of the project are given below:

  1. We first create the total accruals from accounting variables.
  2. We then construct the X1-X4 of the models from accounting variables.
  3. We uses the Compustat variable names, however, they can be easily changed to match variable names from any other database.
  4. We also create the two-digits SIC industry codes
  5. Then estimate cross-sectional regressions within each year and industry, exlucing the focal firm
  6. And finally, we find the discretionary accruals.


Our Stata Code

We have developed easy to use yet robust codes for the above steps. The codes need just a basic understanding of Stata. Further, our comments on each line of code make the code easy to run and understand.  We normally share all Stata files, the raw data files, the final files that result from the completed project, and Stata codes with comments. The purpose is to help researchers to learn and apply these codes on their own. We also try to answer questions that might arise when the researcher applies these codes.



The code is available for $ $99 per model, plus a $50 for raw data processing (in case the data is not in Stata format and variables are not already constructed). If an order for all four model is placed, we offer a discount of 10%. Payment can be made using any of the following methods.


   Wise bank transfer (preferred due to low transaction costs).

  Any major crypto currency

For further details, please contact us at:


See our full list of completed projects



Dechow, P. M., Sloan, R. G., & Sweeney, A. P. (1995). Detecting earnings management. Accounting review, 193-225.

Jones, J. J. (1991). Earnings management during import relief investigations. Journal of accounting research29(2), 193-228.

Kasznik, R. (1999). On the association between voluntary disclosure and earnings management. Journal of accounting research37(1), 57-81.

Kothari, S. P., Leone, A. J., & Wasley, C. E. (2005). Performance matched discretionary accrual measures. Journal of accounting and economics39(1), 163-197.

Project tags: Earning Management models,
Kothari, Leone, and Wasley (2005), Jones Model, FinTechprofessor,
Dechow, Sloan, and Sweeney (1995), Cross-sectional regression,